Techdirt. Stories filed under "usf"Easily digestible tech news...https://www.techdirt.com/
en-usTechdirt. Stories filed under "usf"https://ii.techdirt.com/s/t/i/td-88x31.gifhttps://www.techdirt.com/Wed, 12 Sep 2012 08:26:18 PDTFCC Commissioners All Claim 'The Other Guy' Came Up With This Crazy Broadband Tax IdeaTim Cushinghttps://www.techdirt.com/articles/20120911/17543120349/fcc-commissioners-all-claim-other-guy-came-up-with-this-crazy-broadband-tax-idea.shtml
https://www.techdirt.com/articles/20120911/17543120349/fcc-commissioners-all-claim-other-guy-came-up-with-this-crazy-broadband-tax-idea.shtml
Karl Bode at DSLReports has been following the FCC's "National Broadband Plan" since the first draft was made public back in March. He noted then that an additional $1-5 was to be added to existing customers' monthly bills in order to help fund the USF (Universal Service Fund) and expand broadband coverage.

Neil Grace, a spokesman for Chairman Julius Genachowski, said the commission only made the proposal “following the urging of Republican Commissioners and members of Congress."

"The Chairman remains unconvinced that including broadband is the right approach,” he said. Robert McDowell, the only Republican on the commission when the proposal was floated earlier this year, flatly rejected that he ever supported the idea. "I have never suggested taxing broadband Internet access," he told The Hill.

The Hill's Technology Blog has a few more details, including this bit of interesting bit of skepticism from McDowell, who is first in line to head the FCC if there's a party shift this November :

McDowell said he is skeptical that the FCC even has the legal authority to tax Internet service.

So, if I'm reading this right, no one on the FCC supports this proposal that the FCC put forth and is now considering, even though no one wants it. Got it.

Of course, this wasn't the only suggestion the FCC considered, but the others weren't much better.

In April, the FCC suggested a number of ideas for reforming the fund's contribution system, including adding a fee to broadband Internet service. The commission also sought comments on taxing text messages, as well as levying a flat fee on each phone line, instead of the current system, which is based on a portion of the revenue from interstate phone calls.

Between now and November, this plan will have no support from previously interested politicians. An FCC official has referred to the idea as "politically toxic." Once the elections are over, though, it will probably be placed right back on the table.

The "internet tax" does have some support, though.

A number of companies, including AT&T, Sprint and Google, expressed support for a broadband tax in comments filed with the FCC.

Now, there's a good reason for these companies to support the funding of the UCF through these fees. For starters, this gets passed along to the customers so it's no money out of their pocket. (And it appears on the bill as a below-the-line charge, in order to allow both the government and the phone company to avoid calling it a "tax.") Even better, the UCF has become a loosely-regulated "slush fund" which dumps collected "fees" directly back into the pockets of the same companies collecting it in the first place.

What started as a program with important goals (making sure rural farmers can make phone calls and ensuring the poorest among us can dial 911) turned into an unaccountable corporate slush fund. Today USF is an $8 billion annual program, nearly quadrupling in size since its inception, with the bulk of that increase going to landline and wireless phone companies.

Maybe this massive growth would be no concern if USF were a model program with a sterling reputation for efficiency. Butit’snot. One recent study found that 59 cents of every USF dollar raised for rural networks was spent on administrative expenses and general overhead. A 2010 audit of the rural USF program found that one out of every four dollars sent to participating phone companies was an “overpayment,” with nearly a billion dollars unaccounted for.

The corporate supporters of this plan to "expand the USF contributions base" have no constituency to worry about and have boldly stated that they'd love to have additional fees levied, presumably for noble reasons, like providing 911 service for rural farmers or helping lower income individuals acquire broadband services.

AT&T says that “retail mass market broadband Internet access should be included” in the FCC’s tax, and Google “strongly supports expanding the USF contribution base to include broadband Internet access services,” even as it begs the FCC to exempt Google’s own voice telephony services from the USF tax.

Conveniently ignoring the fact that adding additional fees does nothing to encourage broadband adoption by the low income population, the companies who stand to benefit the most from having more money dumped into a big cash pool are also first in line to make generous offers with other peoples' cash. The government is always more than happy to "pick up the check" on grandiose gestures, but at least every two-to-four years they remember whose wallet they're actually using. But these companies, with a hand stuck in both your back pocket AND the till don't have a periodic attack of conscience. This "broadband tax" will return to the table again and again as long as lobbyists still roam D.C.

Permalink | Comments | Email This Story
]]>the-Man-inadvertently-sticks-it-to-himself-this-timehttps://www.techdirt.com/comment_rss.php?sid=20120911/17543120349Fri, 25 Feb 2011 08:25:00 PST'Consumer' Group Wants Netflix To Tax Customers To Give To Telcos?Mike Masnickhttps://www.techdirt.com/articles/20110224/08200613246/consumer-group-wants-netflix-to-tax-customers-to-give-to-telcos.shtml
https://www.techdirt.com/articles/20110224/08200613246/consumer-group-wants-netflix-to-tax-customers-to-give-to-telcos.shtmlridiculous boondoggle called the Universal Service Fund, which is one of those "taxes" on your phone bill that's supposed to go towards having the big telcos supply service to rural areas. Of course, since there's no oversight, it seems like most of the money just goes into the telcos coffers. There are all sorts of ways to deal with this, but one idea that makes no sense at all has been put forth by the Consumer Federation of America... who thinks that Netflix should be "taxed" to provide money for the USF. Why? Um, that's not clear. Basically CFA seems to think that big internet companies should now pay up just because:

"The Internet is not an infant industry anymore. It can certainly bear the burden of making sure that wires and the communications mediums are there."

So, really, what this "consumer" group is suggesting is that Netflix raise its prices on consumers, to give telcos more money that they just use to pay for operations, rather than actually investing in infrastructure for the disconnected. How does that possibly help "consumers"?

Permalink | Comments | Email This Story
]]>really?https://www.techdirt.com/comment_rss.php?sid=20110224/08200613246Thu, 22 Apr 2010 18:14:56 PDTQwest, CenturyLink Merge, Create Even Bigger Marginally-Relevant USF Money PitKarl Bodehttps://www.techdirt.com/articles/20100422/0931069137.shtml
https://www.techdirt.com/articles/20100422/0931069137.shtmlQwest was founded in 1996 by Philip Anschutz, who at the time owned the Southern Pacific Railroad and used the opportunity to deploy fiber lines along railroad tracks. It seems like only yesterday that Qwest paid $45 billion to acquireUS West in 2000, one of seven baby bells created by the antitrust breakup of AT&T in 1983. Since then, Qwest has stumbled through accounting scandals and watched its stock plummet as the carrier struggled with traditional voice defections without a wireless division to buoy revenues. Meanwhile, it almost was yesterday that CenturyTel merged with Embarq to create "CenturyLink." This morning Qwest and CenturyLink announced they in turn would be merging in a deal worth $22.4 billion (including $11.8 billion in Qwest debt).

At first glimpse it's not entirely clear what the point of the merger is, unless the two companies were simply interested in losing landline and last-generation DSL customers to cable competitors even faster. Neither company has exactly been lighting it up on the network upgrade front -- and Qwest has spent most of the last few years trying to trim debt for an acquisition instead of investing back into the network. The result is a company with aging last-mile infrastructure who (in the markets where it actually sees competition) pits slower DSL against faster alternatives like cable DOCSIS 3.0 technology or community fiber (which they have spent millions suing and fighting in Utah and Washington State).

Creating a larger company doesn't magically spawn a wireless division, and the company is still going to need substantially more cash to upgrade all of that outdated copper if they want to stay relevant. They may be thinking that by merging they can create a "too big to fail" super-rural telco with a better shot of getting USF and stimulus funds. As we've long noted, the USF is a very, very broken program that funnels money to carriers with historically little to no oversight into how that money is spent (and $25 billion has been dumped into e-Rate alone since 1998). Qwest recently applied for $350 million in federal stimulus funds, and lobbyists have been pushing the FCC to expand the USF to cover residential broadband and give more of that money to bigger carriers.

So the result will be a new, massive phone company primarily serving uncompetitive, rural markets using outdated last mile connections, with consumers helped through this transition via a support infrastructure that just grew incredibly fast. All of this will be propped up by the historically-broken (but soon to be supposedly "reformed") USF system and taxpayer subsidy, guided by Qwest lobbyists and an FCC with no real interest in improving competition in the sector. Surely this will turn out well for everybody involved, right?